By Kirell Lakhman
Genoptix today disclosed that Novartis intends to buy it as it becomes the latest drug maker to make a run at the companion-diagnostics field of dreams.
But the deal, for which the Swiss pharma giant plans to shell out $470 million in cash, could ripple across the broader clinical lab community. And I mean that in a positive way.
Basel-based Novartis, which is known for its leukemia drug Gleevec, said it wants to buy Genoptix to help it develop companion diagnostics, particularly in cancer.
Promising not to undermine the lab's core hem-onc business, Novartis said in a statement Genoptix will "enhance [Novartis'] tools and services that aim to improve health outcomes for patients by advancing the ability to define and monitor individualized treatment programs."
Expected to close within the first half of the year, the acquisition "will serve as a strong foundation for [Novartis'] individualized treatment programs" and "will support and expedite the development of companion diagnostic programs, especially in oncology," the drug maker said.
It added that it "plans to maintain [Genoptix's] existing operations and continue delivering [the lab's] portfolio of personalized diagnostics services to community-based hematologists/oncologists across the US."
In her company's own terse statement, Genoptix CEO Tina Nova said the test maker "share[s] Novartis' strong commitment to … enhancing the suite of diagnostic tools for our physician customers."
I would add that Genoptix, whose 500 staffers specialize in diagnosing bone marrow, blood, and lymph node cancers, could also help Novartis revive idle or muddled drug candidates and enable it to more effectively populate its clinical trials.
Each is a burgeoning and potentially lucrative application for clinical labs of all stripes; it's not limited to molecular specialists or esoteric plays.
Though the news blew out of the water my prediction last month that Quest or Aussie monster Sonic Healthcare would pick up Genoptix, the suggestion that a drug maker will seal the deal could be more promising from patients to payors: On the scale of outcomes and pharmacoeconomics, companion diagnostics and pharmacogenetic-based drugs outweigh molecular diagnostics alone almost every time.
Indeed, using pharmacogenetics to revive drugs and custom-populate clinical trials are accelerating hot spots for labs that want to expand, and they would be wise to keep an eye on whether Novartis' nearly half-billion-dollar bet will pay off.
The numbers behind the deal underscore at least Novartis' optimism for the strategy. Though it's a relatively small acquisition from a strictly biopharma-industry perspective — big drug makers are bought and sold for billions — Novartis' bid is a beast for Genoptix and a potential boon for other dynamic test makers eyeing that world.
Its $470 million asking price, which comes to around $25 per Genoptix share, represents a 27-percent premium over Friday's closing price of the test maker's stock.
Shares in the Carlsbad, Calif.-based test maker, which recorded just $148 million in sales during the first nine months of 2010, were up more than 25 percent at nearly $25 in mid-morning trade today.
But it's all relative: This time last year Genoptix shares were fetching more than $32 apiece. And as I wrote in September, when I first mentioned the lab could be a takeover target, I'd said it was having a rough year.
Indeed, Genoptix finished 2010 looking down the barrel of a class-action lawsuit accusing it of issuing "materially false and misleading statements" about its business and financial results."
Still, its investors stood by their buy, and today Michael Nawrath, an analyst with Zuercher Kantonalbank, called the Novartis acquisition "strategically very sensible."
"We see this boost to the further development of individual tests — for predicting which drug fits to which patient — as making a lot of sense strategically," Nawrath told Reuters today.
For its part, Genoptix gets a drug maker already shoulder-deep in at least pursuing the theory of having pharmacogenetics and companion diagnostics play a larger role in its R&D efforts.
In December 2010, for instance, Novartis penned a deal with Asuragen to develop tools aimed at helping clinical labs standardize BCR-ABL testing for patients with Philadelphia chromosome-positive chronic myelogenous leukemia treated with Gleevec, my colleague Turna Ray wrote in Pharmacogenomics Reporter.
In February, the drug maker said it plans to use pharmacogenetics to revive its Cox-2 inhibitor Prexige with a safety genetic marker, Ray reported.
And a couple of years earlier, Novartis was among several big pharmas to have "redesigned" its R&D infrastructure in a bid to accelerate drug development and cut bureaucracy, and had decided to dig deeper into genomic targets that might help it develop drug-diagnostic combinations in "several smaller" disease markets, according to Ray.
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